Ensuring that your home in Spain is legal is usually the first (and rightfully so) concern anyone has when considering a purchase. However important this point is, there are also other aspects of the purchasing process you should consider to ensure you have a trouble free experience in both buying and using your place in the sun.
You would have had to have been living on the moon not to have seen at least one episode of Holiday Homes from Hell or read one of the many tabloid stories damming the virtues of overseas property ownership. This type of media coverage does tend to err on the side on negative sensationalism. On the other hand programmes such as ‘A Place in the Sun’ perhaps paint an unrealistically carefree picture of buying an overseas property. I would say that the reality lies somewhere between the two ends of the media spectrum.
There is a need for genuine caution and diligence and with that comes a clear route to a happy experience.
LAND GRAB
One of the most publicised issues of recent years has been the Valencian Land Grab law or the Ley Reguladora de la Actividad Urbanistica (LRAU).
In 1994 the government of the Valencian Community passed the controversial law with the aim of speeding up the process of urban development. The law was made with good intentions to ensure that developments were built with the necessary services, green areas, roads, lighting and sanitation that you would expect as an owner of a property.
The problem with this was some unscrupulous developers used this law to their advantage, by forcing some small land owners to either give up their land through the reclassification from Rural to Urban land, or by presenting these small rural land owners with bills for ‘urbanising’ their own land. In 2006 this loop hole was closed when the Valencian Government replaced the LRAU with a new law known as LUV ‘Ley Urbainstica Valenciana’ The new law has certainly strengthened the position of small rural land owners, but the simple route to ensuring safety in this regard is to only consider purchasing a property in an area that has already been classified as urban.
NEW PROPERTIES
You may well have heard about people buying off plan properties and due to lack of necessary paperwork and building licenses, ending up with problems with delays in completion, or in some cases no completion at all.
A lot of these issues came about when there was a huge demand from buyers from the UK and all over Europe for new properties in coastal Spain. This demand meant it was not uncommon for some builders’ to start the various license application processes, and start to sell and build before these documents were finalised and received.
Failure to obtain the paperwork in time for completion of the property could mean a delay in the buyer being able to move in. Often building work delayed while these important documents were being issued. In some extreme cases building work was never finished as licenses were never issued at all.
Today the market in Spain is very different. There are very few new building projects being started. Builders are concentrating on selling their existing, completed housing stock. The slowdown in the market has enabled a ‘catch up’ in license applications and legal documents. Therefore a good start to protecting yourself against building delays, now at least, concentrate your property viewings on existing ‘key ready’ homes.
Once a property has been completed a ‘License of First Occupation’ can be issued by the local town hall. This document confirms that the house has been built in accordance with the building licenses, that there is no outstanding work to be done and the property is fit and safe for habitation.
Properties without the ‘License of First Occupation’ can still be legally bought and sold, however in recent months more and more banks in Spain will not consider lending on a property without a LFO, and connecting to utilities can also be difficult. So buying without a LFO could have a serious affect on the resale value of your property. Sometimes a property on the market for what seems an unusually low price can often be missing one or more of these important documents, even if they are not a legal requirement for purchase. It may be a hackneyed expression, but you really do get what you pay for.
Now of course a good lawyer will be able make all these checks for you when you decide to buy. Should a problem be identified at that stage you may be thankful the lawyer saved you from an expensive mistake, but also rightly angry that you have spent time and money on travelling to view the property in the first place to only find yourself back at square one. Make sure before you arrange any viewings that your agent only sells properties that will have satisfactory paperwork.
Lorena Gutierrez works in the Products Department for MASA International. Lorena and her team collect copies of legal documentation from the developers prior to the company listing the homes and arranging any viewings for prospective buyers. These checks are made so MASA is satisfied that the client will be able to move into their home without any problems.
RESALE PROPERTIES
Buying a resale property means there’s some additional due diligence that needs completing before you should be satisfied enough to buy. In addition to the land registry checks, building licenses and License of First Occupation, we also need to consider a few other things. Now as long as your lawyer carries out these checks, you should have no problems at all. By you having a little up front knowledge of the things to look out for, you can cut down on the time, travel, and cost involved in coming to Spain to view resale properties.
Extensions and modifications to the property…
Careful consideration is needed when it comes to buying a property with any modifications or extra work that may have been carried out by the seller. It is common to see an extra room or extension added, much the same as it is in the UK. It is not uncommon to even see an extra floor added to a bungalow. Unfortunately, in many cases this extra work has received no official approval from the Town Hall. The consequence of such work varies depends on the degree of modification.
Firstly, any extension or rebuilding of the property that is not on the official plans held by the Town Hall will not be given any value by the bank. This of course could affect you or any subsequent purchaser of your property should a mortgage be required.
A neighbour or local resident may object to the work that has been done on the property. In Spain, this is known as Denunciation. The consequences of a Denunciation could be a fine or even an order to remove the offending build.
The resale department of MASA International checks for this type of issue prior to listing resale properties. Naturally, a good local lawyer will be able to make these checks for you too.
Debts and Encumbrances…
In Spain, debts stay with the property. Buying a property which has outstanding bills such as water, electricity, community fees, taxes or even mortgage payments means you as the new owner will now be responsible.
Unfortunately with all too much regularity, potential purchasers can be swayed by what appears to be a very cheap bargain property advertised locally or on the internet, only to find out at the last minute that there are unpaid bills. Again, a good local lawyer will have checked this before it’s too late, but by then you are again back to square one in your search for home in Spain.
A good agent such as MASA International will have made these checks before allowing any potential buyer to start viewings.
YOUR FISCAL OBLIGATIONS IN SPAIN
With owning a property in Spain, either as a holiday home or primary residence comes an obligation to pay taxes unfortunately. Don’t be alarmed and in fact you’ll probably be pleasantly surprised – if that’s at all possible when it comes to paying taxes. Taxes in Spain is whole e-book in itself (one day maybe!). I recommend speaking to a Spanish Tax Specialist, who for a small fee will take care of form filling and give you the best advice to minimise the payments you need to make. Talk to http://www.abacoconnect.com directly or ask your MASA Property Advisor to set up a meeting for you, when you come over to Spain.
